This Rare 10.5% Dividend Won't Be Cheap For Long

What if I told you there’s a way you can buy your favorite blue chips and get a dividend up to 6 times bigger than what these stocks pay today?

Let’s be honest: with an income stream like that, backed by household names like Pfizer and AT&T—more on these two stocks below—you’d leap at the chance, right?

The truth is, you’d be crazy not to.

Well, now you can. And today I’m going to show you exactly how to do it—and 2 quick moves to get you there instantly.

Like Buying Cheap in 2009 … and Knowing What Happens Next

Funny thing is, for a brief, shining moment in the not-so-distant past (early March 2009), many blue chips actually did deliver payouts of 7%, 10% and more.

It’s true!

The catch? You needed nerves of steel to plunge in while everyone else was sprinting from the worst market crash since 1929.

The height of this dividend bonanza came in March 2009, when the market finally hit bottom during the financial crisis. Back then, the dividend yield on the average S&P 500 stock spiked to 3.9%, more than twice what you’d get today.

That, of course, is because share prices had nosedived, driving dividend yields up as they did.

Popular dividend payers yielded even more, throwing off payouts we’d never seen from them before (and won’t again). Check out the incredible yields Pfizer and AT&T dropped on shareholders in early March of ’09!

But as I said, grabbing these payouts required monk-like calm. Plus, you’d have needed plenty of cash ready to deploy fast, as these fat yields went up in smoke as the rebound kicked in and dividend payments rose from the dead.

What I’m going to show you today requires neither of these things.

It’s a simple, one-click strategy that lets you lock in safe, high-single-digit (and low-double-digit) payouts from the likes of AT&T, Pfizer, Cisco Systems,Southern Company and hundreds of other dividend payers you know well.

And unlike that fleeting moment in ’09, you can buy as quickly (or as slowly) as you like, either all at once or a bit at a time through a proven method like dollar-cost averaging.

The best part? You can grab these “hidden” dividends at fire sale prices, too.

My “Dividend Conversion Machine” Revealed

The simple strategy I’m talking about really isn’t a strategy at all: it’s an asset class called a closed-end fund (CEF).

Don’t let the jargon-y name fool you. CEFs have a lot in common with garden-variety mutual funds, but with two pretty straightforward differences:

Their market prices tend to differ from the value of their underlying portfolios, also known as their net asset value (NAV). This is where our chance to buy cheap comes from, as I’ll show you below.

They boast outsized dividend yields (payouts of 7% and up are common in the CEF space)!

Best of all, many of these CEFs hold the same blue chips and Dividend Aristocrats you’re probably sitting on now, so trading them in for these triple-sized income streams is easy.

So let’s move on to the two picks I have for you today, starting with…

CEF Pick No. 1: A “No-Drama” 6.4% Payout

The Sprott Focus Trust is run by Whitney George, a Wall Street vet who taps the lessons of Warren Buffett to snap up cheap stocks and hand shareholders a tidy 6.4% dividend. So if you put, say, $200,000 in George’s care, he’d send you back $1,067 a month in dividend income. Not bad.

And it’s just the start.

The best part of buying this fund is the smooth ride it gives you through all market weather: look at this chart showing FUND’s year-to-date total return, which has matched the market while muting the big drops we saw in February and again in late March.

And don’t forget, because of that outsized dividend, most of this return was in cash!

Which brings me to FUND’s upside, and the weird “double discount” you get when you buy now.

First, the fund trades at a 9.8% discount to NAV, so we’re buying in for 90 cents on the dollar right off the hop here—a ridiculous markdown when you consider the fund’s steady performance and sky-high yield.

Second, thanks to Whitney’s keen eye, the stocks in FUND’s portfolio boast a bargain price-to-earnings ratio of 18.5, way below the market, at 24.1.

Those are two blaring indicators of market-beating upside ahead, not to mention the cushion they give you in the event of a crash. The portfolio’s high quality comes into play here, too, with proven dividend and growth names like Apple, Cal-Maine Foods, Helmerich & Payne and Western Digital.

The Liberty All-Star Equity Fund boasts a 5-person management team that adds a dash of growth to its value focus—and this shows in USA’s results: the fund has doubled the market’s return this year and tops the benchmark over the last 1-year, 3-year and 5-year periods, too!

Better yet, this gain was almost all in cash, thanks to USA’s blockbuster 10.5% dividend. To put that another way, $200,000 in this fund would get you a tidy $1,750 per month in cash!

That massive income stream comes from a portfolio built on big-cap stocks, such as Google, Facebook, Visa and, you guessed it, Pfizer and AT&T. In other words, if you hold any of these names (as most folks do), you could swap them out for USA and start tapping that 10.5% payout today.

With all this in mind, it’s hard to understand why this expertly run fund trades at a 5.8% discount to NAV. When you consider that it’s traded at serious premiums to NAV in the past, it’s easy to see the upside we have coming to us here.